SBD/May 1, 2014/FranchisesPrint All
The NBA advisory/finance committee, consisting of 10 owners, today "will hold a conference call" to determine "what to do now" in order to vote out Clippers Owner Donald Sterling, according to Mike Bresnahan of the L.A. TIMES. All 30 owners "aren't scheduled to meet until a regular mid-July gathering, but a resolution over Sterling is expected well before then, with a vote in a to-be-determined manner" (L.A. TIMES, 5/1). USA TODAY's Jeff Zillgitt writes the league's owners in a "best-case scenario" could "vote to remove Sterling and force him to sell the team in mid-May." But Sterling is "expected to throw up a roadblock, filing an injunction to stop the NBA." One possible route Sterling could take is "claiming an antitrust violation and saying the NBA is trying to undermine the value of his franchise and injure the competitive process of the league" (USA TODAY, 5/1).
DOES THE CASE HOLD WATER? In L.A., Wharton & Pfeifer cite legal experts as saying that if Sterling "decides to fight back, the resulting litigation could drag on for years and set a precedent for American professional sports." The courts will find "little or no precedent for a team owner facing expulsion because of offensive comments about race." New Hampshire School of Law professor Michael McCann said, "We're in uncharted territory." The team is "owned by the Sterling Trust, which includes Sterling, his estranged wife, Rochelle, and two living children." A Clippers spokesperson "did not provide percentages of voting rights or other details." Sterling "could be motivated to hang on to the team if only for tax reasons," as one predicted that if Sterling were to sell at an estimated $1B, "capital gains and state taxes could exceed" $360M. Wharton & Pfeifer note a large share of those taxes "could be avoided if the owner bequeaths the franchise to his family upon death." Sterling's lawyers would have to "show that their client faced irreparable harm from a forced sale" and "present a case that has substantial likelihood of success at trial" before any injunction could be issued. N.Y.-based Foley & Lardner attorney Irwin Raij said that an injunction would "place the team under the management and control" of NBA Commissioner Adam Silver "until the legal dispute is resolved." Wharton & Pfeifer note if Sterling "subsequently filed an antitrust suit, he would have to prove the league's other 29 owners conspired to oust him in an anticompetitive manner, forcing him to sell his team at below-market value." McCann said that a breach-of-contract suit would "require showing that the league misinterpreted or did not follow its own bylaws" (L.A. TIMES, 5/1).
SEE YOU IN COURT: In N.Y., Armstrong, Madden & Thompson cite a source as saying that Sterling "won’t go down without a fight" and will "sue the league if the other 29 owners vote to force him to sell." Source: "He is not going to sell the team. ... He'll sue and it'll take years to settle" (N.Y. DAILY NEWS, 5/1). Also in N.Y., Kerber & Kosman cite a source as saying that Sterling will work with Clippers General Counsel Robert Platt to "fight the NBA." Source: "I think it will be one last-ditch effort for both billionaire Sterling and millionaire Platt" (N.Y. POST, 5/1).
VOTE COUNT: YAHOO SPORTS' Marc Spears reported the NBA is "expecting the decision" to force Sterling to sell the Clippers to "be unanimous" among the league's owners (SPORTS.YAHOO.com, 4/30). ESPN's Mike Greenberg said, "No owner, even if he didn’t agree with this, is going to vote in the opposite direction. Then in my opinion, there’s no reason not to just go ahead and make it public for the public relations' sake" ("Mike & Mike," ESPN Radio, 5/1). The L.A. TIMES' Bresnahan writes the "symbolic question would be whether the Clippers themselves could vote not to sell." Bresnahan: "Who casts the Clippers' vote?" A source said that it is "not Sterling." It will be "either President Andy Roeser or Coach Doc Rivers" (L.A. TIMES, 5/1). Hawks Managing Partner Bruce Levenson: "There is a process, and assuming that process is followed properly and the allegations prove to be true, I would vote yes" (ATLANTA JOURNAL-CONSTITUTION, 5/1). Heat F LeBron James said of Silver's ruling, "The job is still not done. It's a win, but we still need the owners to do their part." ESPN.com's Darren Rovell reported that the NBA has "requested that owners and senior management not make any further public comments about the Clippers and the ownership situation." James: "I've seen some of the owners come out and say they're in favor of the decision Adam Silver made. But it's not all of them. We need three-fourths of them, and I've only seen, like, three or four of them comment. So we need more than three or four" (ESPN.com, 4/30).
FREEDOM OF EXPRESSION? SLATE's Mike Pesca wrote the process of forcing Sterling to sell "does raise some troubling issues." A private citizen "whose private thoughts were audio-taped (perhaps illegally) has been told he can no longer own his private property because of the thoughts that were revealed on that tape." These thoughts were "loathsome to be sure, but didn’t advocate anything illegal and didn’t call for any violent or even literally hurtful actions" (SLATE.com, 4/29). In San Antonio, Tom Orsborn reports Mavericks Owner Mark Cuban yesterday "lamented the 'lack of privacy' in America," specifically in reference to the Sterling scandal. Cuban: "If you just completely put aside the NBA, everybody's life has been changed. You don't have privacy." Cuban also "declined to say how he would vote in the Sterling matter." Cuban: "I looked at a picture of my house and saw it was made out of a whole lot of glass, so I don't have anything else to say" (DALLASNEWS.COM, 4/30). In Orlando, Mike Bianchi asks if Magic Owner Rich DeVos might be "the next owner to be scrutinized for a stance that is considered biased and bigoted by some." CNN was in Orlando this week "working on a story about DeVos and his strong stance against gay marriage." Bianchi: "How does the NBA decide what an owner can and can't say or do?" (ORLANDO SENTINEL, 5/1).
DreamWorks SKG co-Founder David Geffen's office yesterday confirmed that he, Oracle CEO Larry Ellison and Oprah Winfrey "will form a group to buy the Clippers should the NBA strip Donald Sterling of the team’s ownership," according to Scott Reid of the ORANGE COUNTY REGISTER. The group "will likely be joined by several other high-profile, well-financed parties" in bidding for the team. However, few groups, if any, "would have the financial resources equal to those for the Geffen trio," who have a combined estimated personal wealth of $56.5B. Meanwhile, Basketball HOFer Magic Johnson "is also interested in leading a group" backed by Guggenheim Partners. Johnson: "It has to be the right situation. Is the Clippers the right situation? Of course. It’s one of the premier franchises." Lakers investor Patrick Soon-Shiong is seen as "another potential suitor" (ORANGE COUNTY REGISTER, 5/1). The WALL STREET JOURNAL's Karp & Woo note Ellison and Geffen "are close friends" who "have both had their eyes on NBA teams" (WALL STREET JOURNAL, 5/1). Geffen said that he and Ellison "would run the team, while Winfrey would be an investor." Geffen spoke to ESPN's Jeremy Schaap and said, "Oprah is not interested in running the team. ... Larry would sooner die than fail. I would sooner die than fail. Larry's a sportsman. We've talked about this for a long time. Between the three of us, we have a good shot." Geffen "reportedly tried to buy at least a controlling stake in the Clippers" in '10 for $600M, but was "rebuffed by Sterling." Geffen: "I'm a fan. I bring something to the table, it's fun and I can afford it. I live in L.A., that's one thing that makes it attractive" (ESPN.com, 4/30). ESPN's Keith Olbermann said of the trio, "This group might have a legit shot" ("Olbermann," ESPN2, 4/30). In San Jose, Steve Johnson notes others "interested" in a stake in the Clippers are actor Matt Damon and rapper P. Diddy (SAN JOSE MERCURY NEWS, 5/1). BLOOMBERG NEWS' Peter Newcomb reports music mogul Irving Azoff is "putting together a group to bid" on the Clippers (BLOOMBERG NEWS, 5/1).
OTHER INTEREST: L.A. real estate developer Rick Caruso said that at least partial control of the Clippers "by an ethnic minority owner would make sense." Caruso: "The ownership of the team should reflect the diversity of the city and the fan base." In L.A., Rainey & Fenno cite sources as saying that they viewed Guggenheim as a "serious competitor should it decide to pursue the Clippers." The group paid $2.15B for the Dodgers (L.A. TIMES, 5/1). Clippers coach Doc Rivers said of the team, "It's in a great location ... We have some pretty good players. I just think it's a very valuable franchise in that way and that's why a lot of people want in on it. You knew that if this franchise ever did go for sale that there would be a lot of people in line because it's a good market with a good team and people see lot of promise." Rivers said that he "hasn't considered the possibility of investing in the team if one of the prospective ownership groups approached him" (ESPNLA.com, 4/30).
ALL THE RAGE: In N.Y., Witz & Pilon in a front-page piece write the Clippers are in a "strikingly unfamiliar position: the toast of the town." The prospect of an auction "created a frenzy, with hands flying up, playfully and not, for a chance to bid on the most coveted commodity in professional sports, a competitive team in a major market." Most agree that the Clippers "have room for enormous growth on the business side" (N.Y. TIMES, 5/1). ABC's Ryan Smith called the Clippers the "hottest property in pro sports" ("Nightline," ABC, 4/30). In L.A., Vincent Bonsignore writes a "once-beleaguered franchise that for so long fought for relevance in its own city [is] now finding itself the apple of everyone's eye" (L.A. DAILY NEWS, 5/1). A header in the N.Y. POST reads: "For Once, The 'Other' LA Team Is In The Spotlight" (N.Y. POST, 5/1).
FAMILY MATTERS: In L.A., Mike Bresnahan notes Sterling and his wife, Rochelle Sterling, "own the Clippers in a trust," and their two adult children, Chris and Joanna, "might also be included in it as well" (L.A. TIMES, 5/1). In N.Y., Kevin Armstrong cites an NBA source as saying that the league has "considered asking Donald Sterling to transfer control of the team to his wife" (N.Y. DAILY NEWS, 5/1). ESPN's Bomani Jones said of Rochelle Sterling, "Once people get a broader idea of how involved she was in Sterling's activities I see no way possible that she could own the Clippers" ("Nightline," ABC, 4/30). In N.Y., Dillon & McShane note Rochelle Sterling's chances of "assuming control of the franchise took a hit with the exposure of five-year-old depositions alleging her own bigotry against blacks and Hispanics" (N.Y. DAILY NEWS, 5/1). USA TODAY's Sam Amick writes the immense interest in the Clippers "makes it all the more absurd" that Rochelle Sterling "would receive consideration" (USA TODAY, 5/1). Rivers was asked if Rochelle Sterling's continued presence at games could be a distraction and responded, "Yeah, it could be. Obviously, if it was overbearing, it would be, let's be honest. ... I wish I knew the right way on that one. I don't. ... I think either way would create a reaction" (LATIMES.com, 4/30). ESPN L.A.'s Arash Markazi noted Rivers "is in charge of basketball operations while Clippers president Andy Roeser is in charge of business, but Sterling had the final say" in matters before he was banned. Rivers and Roeser "are moving forward without that final say until the league or someone else tells them otherwise." Rivers: "There are things day to day that I do that I need some guidance on, and right now we're just doing them and making our decisions" (ESPNLA.com, 4/30).
New York Gov. Andrew Cuomo's administration will be "hiring a consultant to quickly turn around a plan to present to would-be owners" of the Bills in the months ahead "depicting everything from possible new stadium sites in Western New York to the role of the state in a new stadium to the financial benefits of keeping the team in the region," according to Tom Precious of the BUFFALO NEWS. New York State Dir of Operations Howard Glaser said, "We want to send a message to potential ownership groups that we’re very serious about looking at a stadium as part of the package to keep the Bills in Western New York." Precious notes a consultant is expected to "be hired in the next few weeks for a contract that calls for the as-yet unknown company to develop a presentation within 90 days that could be presented to future owners." The New York Economic Development Agency a couple of weeks ago "quietly retained the services" of Manhattan-based law firm Foley & Lardner to "represent the state's interest in upcoming expected talks." The moves represent "a sudden push by the Cuomo administration" since the recent death of Ralph Wilson Jr. to "keep the state’s interests in play as the team’s future remains uncertain" (BUFFALO NEWS, 5/1). Precious notes Foley & Lardner lawyer Irwin Raij has been called the state's "ringer" in the talks because of "his expertise in cutting complex sports deals, from team ownership to stadium financing and construction." Raij considered the '13 stadium lease deal "a sort of Phase 1 for keeping the Bills." Now, with "new owners coming on board, more work needs to be done." Raij said, "Now we have to work on Phase 2, which is how to take (the Bills deal) from 10 years to, whatever, 25 or 30 years. Frankly, I don’t know what that solution is yet" (BUFFALO NEWS, 5/1).